see you around. yeah. ♪ i'll help you carry on... ♪ melissa: i am lissa francis and here's what is "money" tonight. how close is israel to a full out war? for the clinton house broker a cease-fire, but the firing has not stopped. we will break it all down. and staggering news from hewlett-packard. evidence of financial fraud in connection with a software company they acquired last year, this one could have huge impact on the bottom line, and the stock market as a whole. all those details. plus, just in time for black friday, would raising wages for retail workers kickstart the economy? one study says it could boost gdp by 15%.

i'm not really buying that. when the people behind that report is here to disagree with me. even when they say it is not, it is always about "money." all right, let's take a look at the headlines, fed chairman ben bernanke warning of dire consequences if we go flying over the fiscal cliff, bernanke says failure to make a deal could trigger another recession. he also says the fed does not have the tools needed to stop another downturn. and they're calling it the largest insider trading case ever. sec charging him with conspiracy to commit serious fraud. reporter made $276 million in illegal profits after receiving a tip from a doctor about a new alzheimer's drug. hewlett-packard's taking a dive today in a shocking report of

fraud. we will have all the details here in just a moment. but first our top story tonight, the fighting between israel and hamas continues. senator said hillary clinton met with diplomatic leaders in egypt today to help broker a cease-fire but that did nothing to stop more missiles being fired at israel and one israeli soldier has reportedly been killed, so how close is a ground war between israel and hamas in the gaza strip? david miller is live on the border, with its latest from there? >> there was late night diplomacy, but nothing significant change resolve the conflict. over my shoulder you can see the defense system, a news conference held a short time ago with hillary clinton and israeli prime minister benjamin netanyahu. they thanked them, the statistics said looking forward to the days ahead to work with

israel and the egyptian government to broker a deal. mr. ness now who says his choice to resolve this is diplomacy. listen. >> is a possibility of achieving long-term solutions this problem, we prefer that. but i am sure you understand israel have to take whatever action is necessary to defend its people. this is something i don't have to explain to americans, i know president obama's view and they understand that perfectly well and i thank you for your support. speak of militants fired rockets into israel, some landed not far from the city of jerusalem. another in a suburb and did some damage to an apartment house. southern israel hit by a barrage of rockets throughout the day.

>> early this evening there was a large blast, rocket fired from gaza penetrated his apartment house. this is what is left of the bathroom. you can see the window destroyed. so the concrete shared off. take a look. or on the fifth floor. below me is the fourth floor. the rocket made its way one floor below. miraculously nobody was injured. the occupants of this house made their way to a safe room and were protected from the explosion. for one of the owners of this home, he is an ambulance driver, a volunteer, and he was out tonight helping others. >> did you ever think this would happen to you? >> i went to help the others. now today, the missile finds me in my private home.

>> so, melissa, it looks like effort to resolve this diplomatically continue, but the bloodshed continues throughout the evening. we have heard israeli military aircraft headed in the direction of gaza. the death toll hits at least 21, that includes two children who have died. melissa: from your position there, the israelis happy about a possible cease-fire? or would it just create more anxiety and fear of what comes next? >> the israelis want a cease-fire. alold sides want a cease-fire. but they both want it on their own terms. one thing at the israelis said tonight, they want, it echoed the sentiment of a prime minister, a durable cease-fire, a lasting cease-fire. what they don't want to do is have some kind of a truce that is a band-aid and a short period of time the conflict rears its

ugly head in a significant way resulting in even more bloodshed. melissa: stay safe, thank you so much for your reporting. senior naval analyst for the institute recently wrote an analysis of the iron dome. he is also a former u.s. navy helicopter pilot, he trained extensively with the israeli navy while operating in the mediterranean. welcome back to the show. let's get right to it. your expert opinion, do you think a war is imminent here? >> thank you for having me. i don't think war is imminent. what we have is what i would describe as a medium or high intensity tactical conflict. until the israelis cross the border with ground forces into gaza, we have not sucked up into full war. the other thing to keep in mind, this low intensity conflict between israel and hamas has been going on for the better part of six years.

there's only been in the past week or two it has exploded into this level of violence. melissa: why do you think it is exploding now? exploded now? it's a changing neighborhood? neighbors have become even more hostile toward israel, egypt with the muslim brotherhood and their ties or potential ties to hamas. seems like turkey, their words have been so inflammatory, it seems all of a sudden they find themselves more alone than ever. do you agree with that? speak unfortunately there are two problems israel is facing. the increased islamist influence in turkey and egypt. historically they have had a fairly decent working relationship between their militaries. a lot of the changes in domestic political structure in turkey have favored the rise of islam. so turkish military is no longer cooperating as closely with israel as they once were.

that the same time we've seen te rise to power in egypt, that does not bode well for the future of egyptian israeli relations. the last one i want to make, in her introduction you said it is always about the money. the best way to do this conflict is a new front, economic front opened by the iranians against the israelis. manufacture rockets for about $1000 apiece. it cost the israelis 50,000 50,000-$100,000 to shoot these rockets down. every is under pressure from the sanctions against them, they're applying pressure against israel by supplying massive quantities of low-cost rockets. melissa: so how does that play out from their? who runs out of money first? >> it is bad news for israel. 50, 60 years ago the israelis could fight in the same manner that enemies fought. it started out as a very poor state essentially fighting

guerrilla warfare against the armies. over the last 60 to 70 years, the defense forces, they have embraced technology advantages and now have a qualitative advantage over their foes. but it takes a lot of money to maintain equality advantage technologically. the israelis will lose that advantage it had to spend one times as much money to shoot down a single rocket at the cost iran to make that rocket. iran knows they have long-term a better strategic situation in israel, and i think the secondary analysis with a deeper analysis will show this is iran providing low-cost weapons to israel enemies and those enemies are using it to apply economic pressure to israel. melissa: i've not heard anybody say that in all the discussions we've had on these networks about what is going on in the middle east. let me ask you about the iron dome as well because that is something you know so much about. there are reports that failed to prevent one rocket from hitting the ground.

what do you think about that? the just one rocket was that indicate a larger weakness? speak of any statistical analysis has been an overwhelming success. we arwe're seeing 90% success re probably closer to 95% success rate. the iron dome shooting down rockets out of gaza. no system will be 100% effective, but the technological complexity required to shoot a rocket with a missile is like shooting a bullet with a bullet. the technology required is intense and the israelis have her back to bed. the israelis pay for the development of the iron dome system themselves. america has been paying for the production of the iron dome systems. there is another problem economically, which is we don't know exactly how many interceptors israel has in their supply system. melissa: how many do you think? >> my informal assessment based on open source reporting was

about 1300, maybe 1350 interceptors to start. they shot off at least 400 this past week. it's a drop of 25 to 30% of their supply. now the problem is hamas had 10,000 rockets in gaza to start. hezbollah has 40-60,000 rockets in syria and southern lebanon. iron dome is qualitatively superior to anything that hamas or hezbollah has. melissa: thank you for coming on, that is all very important information i have not heard anywhere else and i hope you'll come back on soon. >> absolutely. thank you for having me. melissa: crude oil futures falling 3% after hope for a cease-fire in the gaza strip immediate concerns of supply risk in the middle east. let's hope those hopes are not premature.

and chevron files and ethics complaint against new york comptroller, the oil giant says it received at least $60,000 in campaign and donations for backing an environmental lawsuit against chevron in ecuador. the stock closing down slightly. in the first auction of greenhouse gas credits, allowances for the equivalent of 28.7 million-ton of co2 sold off november 14 auction. the sales rate almost $300 million for the cash-strapped state. next on "money," hewlett-packard could owe billions in a bad deal gone wrong. but is it their fault? and who is going to pay? plus it has the power i and the fiscal cliff negotiations? looks like old sites may be stopping as they prepare their version of the deal. we will find off the top republican with the final outcome but look like. more money coming up.

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melissa: potential fraud rocking

wall street. hewlett-packard acquires a company for more than $10 billion. now hp says the exact cook the books to get the deal donn. adam shapiro has been covering the story all day and it's you with the details. we also have former u.s. attorney and federal prosecutor. i will start with adam. this is staggering. >> here is the very simple problem. you have hp under former ceo buying this firm, now saying after mike lynch, who was the founder and ceo, after he left, and executive comes forward to hp and says there are problems. there are improprieties. the dude due diligence?

melissa: basically stood by the books and said we looked at them, here are the books. >> so, hp, how is that million dollars b he spent on the econo. what kind of due diligence really was done? hp or sony former executive under the us and mike lynch, nobody else. melissa: what is your take on this? on the surface my response was didn't hp do the due diligence? they did not spend enough time looking at the books of the company they were buying to mention the revenue streams and everything else were on the up and up, but they had this top-notch accounting company standing behind the books, what do you think the real story is? >> don't think there's any doubt this is bad due diligence.

they are liable civilly, they may also be liable criminally. this is referred to the sec and justice department, former executives civilly and criminally liable. this is a big deal. $8 billion mistake. what kind of accounting firm mrs. $8 billion of accounting? >> meg whitman is defending, the ceo currently who was not there when this went down, but the current ceo of hp. if you're a shareholder have to ask why did she say with regar regards, "neither of them saw what we now see if somebody came forward." melissa: that is their whole job. to see what others don't see.

>> this is really pathetic. every one of the people involved in this decision-making, specially former executives are all on the hook. there are some angry hp shareholders, would assume they will be some big shareholder lawsuits. melissa: is this the death knell? speak i'm not qualified to say, but i look at a company which is gleeful a year ago when they put in a purchase can actually put up a website which says please by autonomy. guess what they did. oracle said it was way overpriced. the former hp ceo who proceeded actually said to mike lynch, no way, this is way overpriced. >> bad management all along the way, and no doubt brought on the part of people inside autonomy.

melissa: it has to be from the evidence of the way it is laying out, but had to think of those auditors, is it reasonable to think they were stupid and lazy, or were they in on it? we don't know, we're totally speculating, but what do you think? >> no big accounting firm misses $8 billion of accounting and proprieties. it does not happen. there is a very big story here. or the government. very big investigation is about to happen. i am wearing up with some big-time chops. >> i got a statement. they said not our problem. it is the uk firm, don't you love the english. serious fraud office. this is not going to stop with meg whitman's statement that

don't land them. investigators were looking at the account. melissa: thank you for coming on. it is almost down to the wire, just under a month before we fall off the fiscal cliff. it will be such a crazy ride. new developments are being made, baby steps. a detailed progress report for top congressmen coming up next. and can really boost gdp by $15 billion just by paying retail workers a bit more? one report says yes. we will see of th if the math a. somebody is here to disagree with me. we will be right back.

melissa: lawmakers in washington hoping to avoid going over the fiscal cliff. each party is putting together a plan to submit to the president. are they making progress? let's ask texas republican congressman kevin braady, a member of the house ways and means committee. thank you for joining us. give us the truth. making any progress? >> at think we are. republicans understand the seriousness and urgency. to that end we have reached across the table to the outline a plan for increased revenue and stronger economy focusing on a much better and simpler tax code. what is missing in the equation, the balance is authentic spending cuts. waiting for the president to outline that times and spending cuts. sends a signal to the market and investors that america is serious about getting its financial house in order.

melissa: let me decode a little bit. you talked about increasing revenue in the simplification of the tax code. that sounds like closing loopholes but not raising marginal rates which still feels like it is the hill the democrats are willing to die on. >> i think it would be a mistake for them to take an extreme position that they would hold the economy hostage to a higher tax rates. in truth they will hurt the economy and it is not a serious deficit proposal. higher taxes the president proposes only pay for seven days or eight days of washington spending. economic growth, for example, returning to the revenue of 2009 will cut our deficit in half. so if you couple that with real spending cuts, authentic spending cuts you really have us headed back toward a balanced budget. and if we focus on how we find a bipartisan way to solve the social security and medicare, that is a signal to investors that we have the right track.

melissa: so if they came out and said they were willing to do something real to cut spending, especially when you come to entitlements, would you be willing to then go back and revisit the idea of marginal rates? >> well, my thought still is if you raise taxes on the small businesses, you know, and on successful families you have actually drag the economy down. that does not help us close the deficit gap. may be politically of fun move for someone to hang their hat on, but the deficit and an economic standpoint, it's just is not make sense. melissa: i absolutely hear what you're saying in think there are people who agree with you. are you willing to stand that ground and not yield and go over the fiscal cliff rather than yielding on that position of marginal rates? >> kiffin important for us to solve this problem i think with the economy flying solo and so

slow, congress and the president ought not be creating turbulence right now. let's just solve this thing. let's all that the right way. melissa: i hear you. what do you do from there to avoid going over the cliff? >> i think the common ground is revenue. we know that we can balance and pay our debts and build that gdp, which is what we are generating. eighteen, 18 and a half percent, @%different issue. we think we can work with the president and democrats to find a way to create new revenue, i mean substantial revenue to start taxing. melissa: you think you have a proposal on paper laid out that is very clear because they say the math is not work. you think you can show them the math and bring a proposal to the president that generates enough revenue to convince them to back of the marginal tax rate think? >> absolutely. and in truth, raising the tax

rates alone will not tackle this deficit in any substantial way at all. raising revenues, economic growth can cut in half which ought to be our goal in these immediate talks. melissa: what is the first thing you have to see, their first step on the spending side that would make you feel better, both sides a coming together. what do you want them to say? >> you know, a strong number of authentic spending cuts, not back loaded ten years from now, but real cuts moving forward. less harmful than those slated for national-security. that would be a big first step. also, i really think that as long as we continue to deduct the challenges in social security and medicare as a nation, we still risk seeing a credit downgrade in the feature. the market knows we need to tackle. >> thank you so much for coming on. we appreciate it. >> thank you.

melissa: here is our money question. we are going over the cliff? we starting to get the sensation? would raising wages for retail workers actually stimulate the economy? think about it. do the math. follow me on twi on twitter. all right. up next, just in time for the holiday shopping season, we can turn the u.s. economy iran despite plan -- paying retail workers a little bit more. here to disagree with me. stunning new evidence suggests refineries in california were open in the midst of the gas shortages that were reported on the last few months. we have all of the standing details on this. piles of "money" coming up. twins. i didn't see them coming.

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investment objectives, risks, charges and expenses. read and considerit carefuly before investing. risk includes possible loss of principal. melissa: three days to go until black friday. the holiday shopping season officially begins. analysts fear that consumers simply don't have cash to spend. a new report says the answer is clear. raise the minimum wage. and workers will have more money a huge boost to the economy. at think it will lead to more layoffs. here to disagree, vice-president of policy and research. thank you so much for coming on. >> thanks for having me. melissa: here is what i think. an employer only has some much money to spend on labor. that is one of their costs of production. if you raise the rate they will have fewer people. it's math. >> let's play this out.

real-life workers. the cashier right now makes about 18,000 year. if we live that to 25,000 a couple of things happen. she will spend that money in the economy. in fact much she will spend a lot of that extra raise at the retail store that employes are. so our study models the effect. basically, you can think of lower-paid employees as job creators when we give them a wage boost. increasing gdp if we assume that companies decide to only pass on about half of the cost of the increased peril. you're looking at $12 billion. melissa: i totally hear what you're saying that that money does not come out of thin air. it comes from the company. they they have dead take it from other workers. >> here is the good news. we have some real-life companies that we can compare, companies that pay better wages than the counterparts.

costco has nearly double the sales per employee and sam's club, which is the wholesale club owned by walmart. this has been studied by folks at mit, harvard business school, wharton business school. when you staff appropriately, customers are happy and unhappy customers spend more money. melissa: they also have to charge higher prices. if your cost of labor goes up the have two choices. that the employees are charged to customers more. those are the employees. they will buy whatever is for a higher price to support the higher wage. the money does not come from a vacuum. >> here is what would happen. if they pass on half of the cost for looking at $0.16 per shopping trip. $17 a year. let's say they pass on 100 percent of the additional payroll cost. you're looking at $30 a year. the idea that we have to pay low wages to have low prices is a

fiction. it is not true. there are real choice is that employers can make in it would be good for the economy. uprighted driven stimulus. melissa: you have made. they're passing in right along. it does not come from thin air. it will come from the customers, their employees. in fact, the last time -- and also, the employment rates. the last time the minimum wage was raised july 24th 2009 unemployment rose and continued to rise for months and months and months after they raised the minimum wage. >> study after study has shown that in states that have higher minimum wages and the federal minimum that there has not been that negative impact on employment rates. so this is actually a good thing melissa: this is nationally. i'm looking at the numbers the last time we did this, and it went up. i mean, that is the data. you can't argue with the data. >> well was the year?

melissa: 2009. >> that was a rough patch. melissa: this is a rough patch now. >> fewer jobs. not in the retail sector. we know it will lead to more jobs because we know that lower-paid employees spend about 20 percent of their earnings at retail stores. some retail stores will get about 4-$5 billion in extra sales the following year. melissa: paying for their own wage increase. >> they will also have baskets filled up a lot higher with goods because happy shoppers buy more stuff. melissa: why are they happy again? they're paying a higher price. >> no. right now one of the things that is rampant across retail is understaffing. let's say tuesday -- melissa: wages are higher, they hire more people. [talking over each other] melissa: fewer people working. >> if wages are higher you will be able to keep the employees, do a better job, and instead of

focusing on adjusting to the minute in terms of scheduling, if you look at companies that keep their staff around, stable hours, quick trip, great convenience chain. nominated one of fortune 100 top companies to work force since 2003. it can be done. it is a false choice that we have been sold. melissa: you did not convince me, but i did not convince you lie there. thank you for coming on. next, refineries in california open in the midst of gas shortages despite reports that they were close? we have someone saying that the gas price spikes might have been bogus. i don't know about this. all the details coming up. at the end of the day it is all about money in thanksgiving. having you ship my gifts couldn't be easier.

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♪ melissa: so, the gas lines and shortages in california over the last few months when the price of gasoline went through the roof on the west coast because refineries said it did not have enough fuel. people who could not get gas. my next guest says, that was all a sham. the oil companies did have enough fuel all along.

take a look at this chart. he says the price hike happened at about the same time that refineries inventory climbed. so what is the deal? the man who wrote the report's joins me now. first of all, where did you -- you have other evidence as well. tommy how you build this case. >> well, we started by reviewing the public data from the federal government and then the california energy commission. that is where we get the inventory data. the inventory data went up during both of the price spikes this year. the one in may and then the larger one in october. the most important research involves going to the environmental authorities. the u.s. does not have much overview of oil and gasoline. a refinery has to report its emissions on an hourly in daily basis. so you can actually get the facts from the operations by going through those. it's a terrible job.

thousands and thousands of pages of detailed reports, but in the end you actually have the factual data in front of you. melissa: so we asked some of our other experts that we have on the show regularly, and this is something that i have cover for more than a decade to look through your data. it seemed like the emissions, it's possible to explain that by the fact that sometimes refineries we will say they are down for maintenance, and part of the refinery is still running the typically they are down. the inventory data is more interesting because that shows it was kind of piling up. what do you think would be the motivation for the refineries to do this? >> well, it is easy to create a conspiracy theory. over 90 percent of the market is controlled by only seven companies in california. california is a gasoline island. we do not get gasoline from the east, and it has a different formula from the refineries and the northwest. so it's very easy to exercise

market power. melissa: the part that i could not get over, we have a lot of people on the show, gas station owners and regional dealers to could not get supplies, and as a result of not selling any product at all. it is kind of hard for me to understand and believe that refineries would be sitting on product and hiding it and not giving it to their customers when prices had risen so they could take advantage of that rising price and just sell there inventory. instead, they were letting gas stations stand empty. that part does not make sense to me. >> well, the economics are very straightforward. lots of competitors, you would sell all your product because if you didn't someone else would. but if there are of very few number of suppliers, the rise in price way offsets' your loss in sales. in this case in october we had an additional profit of $0.73 per gallon. that offsets a lot of lost sales melissa: so what is your next

step with this research? it is interesting and compelling. people poking holes in it. but how would you take it to the next level so that it can be evaluated? what do you think would happen as a result? >> well, that is why we need to have it investigated. that is where the attorney general comes in. let me defer for a moment. there have been no holes put in it yet. we have not had a single substantive response. one other refineries in the bay area refused to turn over its data. in the other case, there is a question of, does the refinery have smoke even when it is operating partially? we did not go on the total. we actually went through a device by device analysis. we identified the specific devices that were down. then we compared those with the emissions for those devices. three of the refineries showed a discrepancy in the bay area. melissa: very interesting. thank you for coming on.

we will continue to follow the story. above be interesting to see what reaction you get. thank you. >> thank you. melissa: next, dick patrick might have been the first woman tap tear up the nascar track, but there is no way she could change a tire like this. details on the woman who is giving the boys are run for their -- you know, i don't think i can do that. you can never have too much "money." ♪ 4g lte is the fastest.

so, which supeast 4g lte service would yochoose, based on this chart ? don't rush into it, i'm not looking for the fastest answer. obviously verizon. okay, i have a different chart. going that way, does that make a difference ? look at verizon. it's so much more an the other ones. so what if we just changed the format altogether ? isn't that the exact same thing ? it's pretty clear. still sticking with verizon. verizon. more 4g lte coverage

than all other networks combined. >> fox business adam shapiro is back. you know who is right next to him, that is monica crowley. what was that about? >> i did not write that. melissa: check this out, this is nascar's first and only female pit crew member. listen to this, ladies who cannot change their own tire. holds a speedy time record of less than 12 seconds to change the front tire position. look at this. amazing. can you do that? >> now come i cannot. it is not that hard to change a

tire. melissa: have you ever done it? >> no, i haven't. she is very cool, her name is christmas. i'm surprised it's taken so long for women to do this.3 they can move faster. she is amazing. >> it is like it was so logical to get danica patrick out there, now it has caught on. >> i have been involved with auto racing with the indycar racing for years and years. melissa: which i watch closely. i think it is fabulous. this next one may come as a shock, the study, people who live in the tropical climates on average live seven years less than those in non-tropical areas. the major factors in the study are conflict, poverty, sanitation, medical, technology,

it starts to make more sense that you think the warm climate, easier to live. what do you think? >> it does seem counterintuitive. this makes no sense. but if you're in an indigenous population, more poverty, less access to medical care, it might actually bring down. >> their life expectancy has been growing. all of the people down in boca, sorry. melissa: it seems we're trying to make ourselves feel better. somebody in maine did this study. as if kids need another reason to be begging for sugary snacks and bouncing off the walls, cracker jacks created a new version.

caffeine coated cracker jacks. can't you see them selling these at bars? less than tha what is in a cup f coffee. i think it is ingenious. >> i would buy it. i love my coffee, i love caffeine. melissa: do you think it taste any different? >> i don't know, i am sure it is good. i am all for the free market, so there's a real need for this. god love them for doing it, but what you get, the caffeine, and you would get the carbs. melissa: i would hope they would get nowhere near my kids. mine haven't discovered it yet, to be a nightmare. >> head-to-head cracker jack's?

melissa: they do not like candy and sweets. >> you are blessed. melissa: for now. some may think appearance doesn't matter but when it comes to money, it does. according to new study, people are more likely to spend a worn-out bill that a brand-new crisp one. what do you think about that? the crumbling nasty ones, they want to get rid of it. but when you have a nice one. >> one of the big laws of economics is money is fungible. still worth $10, does not matter. but that is not necessarily true. it is actually worth more to you psychologically, have you seen or experienced, i dig through my wallet and give the worst one away first. melissa: when we are getting out of the cab, he organizes the money. im